How Do I Finance a Modular Home?

As you’re researching the process of buying a modular home, one of the most important steps to keep in mind is obtaining financing for your future home. Modular homes are generally eligible for most financing types that are available for site-built homes.

To set you up for success with getting a loan for your modular home, we’re breaking down the key steps with advice from modular financing expert Dustin Brudnicki, Senior Vice President of Mortgage Originations Operations at offsite-built home lender Triad Financial Services. 

1. Connect with a lender to figure out your budget before you go to a modular home retailer.

Talking with a lender before your retailer visit can help you determine your all-in budget including the home, land, delivery, and installation. It will give you more context on what you can afford when you go to tour homes at the retail center.

Your monthly payment may include:

• Loan Principal
• Interest
• Property Taxes
• Homeowner's insurance
• Mortgage insurance depending on the loan type and down payment

The lender you initially contact doesn’t have to be the final lender you go with for your loan, offering flexibility to get the budget information you need before you drive onto the sales lot.

Another tool you can use is our estimated monthly payment calculator to break down how much you can budget per month.

READ MORE: What Do I Expect When I Visit a Modular Home Retailer?

2. Review your modular home financing options.

Because modular homes are generally eligible for most financing types that are available for site-built homes, there are many options available to you, expanding your choices and making the process easier. 

Conventional Loans 

Eligibility: Best for buyers with strong credit scores, stable income, and the ability to make a larger down payment.

Details: Provides competitive rates and terms, making these loans an appealing option for those with high credit scores.  

Federal Housing Administration (FHA) Loans 

Eligibility: Ideal for buyers needing more forgiving credit flexibility and lower down payments.

Details: Requires a down payment as low as 3.5% depending on credit. 

Veterans Affairs (VA) Loans 

Eligibility: For veterans, active military members, and qualifying surviving spouses.

Details: May allow for 100% financing (0% down payment) and offers competitive rates and terms.

U.S. Department of Agriculture (USDA) Loans 

Eligibility: Available in rural areas for low- to moderate-income buyers  

Details: Like VA, USDA may allow for 100% financing (0% down payment), making homeownership more accessible in rural communities. Income limits apply based on household size and area.

Fannie Mae and Freddie Mac Loans 

Eligibility: Available for buyers with fair to good credit. 

Details: Provides competitive rates and down payments, making modular home ownership accessible.  

Construction Loans 

Eligibility: An ideal option for homebuyers needing to finance the modular homebuilding process. 

Details: A short-term loan that allows for the construction of the modular home with funds drawn as the project progresses and converts to a permanent mortgage once the home is completed.

Keep in mind that if you go with government-insured or government-sponsored loans like FHA, VA, Fannie Mae, or Freddie Mac, you may have foundation and other requirements that are more stringent than your local building requirements to make your home eligible for the loan. While this may lead to more up-front costs, it may also make it easier for a future buyer to obtain financing and may possibly increase the resale value.

For example, building your home to meet FHA loan requirements will allow any FHA qualified buyer down the road to purchase your home, making your home available to a larger number of buyers.

READ MORE: What Should I Research Before Buying a Modular Home?

3. Choose the lender you want to finance your modular home. 

The options for modular home financing have expanded a lot in recent years, so finding the right lender is easier than ever. There are many large companies who specialize in modular financing, which simplifies the process of identifying a reputable lender. Modular home lenders tend to operate regionally, and a lot of your options will likely be specific to your area of the country. 

Your modular home retailer will likely have a list of preferred lenders they recommend, allowing you to choose from companies they’ve already vetted. 

When you’re comparison shopping among lenders, look at these items to make your final decision: 

• Annual percentage rate (APR): The interest rate and fees you’ll pay each year.
• Total loan cost: The overall amount you’ll be paying for the loan, including principal, interest, and fees across your loan period. 
• Lender reputation: Sometimes total loan cost isn’t everything – it might make sense to have a slightly higher interest rate if it’s a known, reputable lender instead of a lower rate with an unknown lender. 
• Builder collaboration: If you’re choosing between two good options, look at how well the lender works with your home builder, which can help streamline the construction process. Your retailer will be able to tell you which lenders your builder, like Champion, already has a relationship with.  

READ MORE: 3 Things to Do Before You Visit a Modular Home Retailer

4. Submit your application for modular home financing.

The loan application for modular homes is simple, and it’s comparable to the process for obtaining site-built financing. You can apply online or in person if the lender has a location near you. 

Make sure these three key factors are in order before you apply, which the lender will be evaluating as part of your application:  

• Low debt to income ratio
• Good credit score 
• Consistent work history  

Before you apply for a loan, you may decide to obtain a pre-qualification online. This can be a good starting point, but it’s important to be aware that many companies may be pulling your credit scores if you use this service. Credit scores can change a lot in 30 days, so your pre-qualification results may be out of date by the time you apply for the loan. 

Your loan application can be strengthened by putting down as large of a down payment as possible. The larger your down payment, the better financing options you may get. Also, putting down 20 percent or more of the total value may help you avoid having to pay private mortgage insurance.

Another way to strengthen your application is by using your land’s equity as collateral. Since land is valuable, lenders view it as solid collateral for your loan, bolstering your ability to qualify.

If you don't already have land and are looking to finance the land and home all at once, that can also be done through many loan types. 

READ MORE: How Do I Find Land for a Modular Home?

For more information about our modular homes, find the best Champion home for you, or contact a Champion retailer in your area. You can also contact our Homebuyer & Homeowner Assistance line Monday-Saturday 8am – 8pm EST at 877-201-3870, or fill out our contact form and a member of our team will reach out to you. 

Note: Champion Homes is not a lender and cannot provide financing to homebuyers. Champion Financing, LLC provides loan services for borrowers qualified through independent lending institutions.